Good news for anyone thinking about buying an electric car: the batteries that power them got a lot cheaper last year. In 2024, prices for lithium-ion battery packs, the heart of any EV, tumbled by 20%, according to a study by the International Energy Agency (IEA). This is the biggest price dive seen since 2017.
Why the sudden price break? It’s a mix of factors. More companies are now making batteries, and that leads to increased competition. Factories are ramping up production as the demand for EVs continues to grow, pushing the industry to innovate and cut costs.
The IEA report highlights that lithium, a key ingredient in these batteries, saw its price fall by nearly 20% in 2024, returning to levels last seen around 2015. This is despite the fact that the world used about six times more lithium in 2024 than it did back then. While cheaper minerals are a welcome sight for lowering EV costs right now, the IEA cautions that if prices stay too low for too long, it might discourage companies from investing in future mining projects.
Battery prices fell everywhere, but the steepest declines were seen in China. This isn’t entirely surprising, as China has established a huge lead in the global battery race. The country is securing the raw materials needed, but it’s also ahead in developing new battery technologies. The IEA study states that a staggering 80% of all EV battery cells produced in 2024 came from China.
The report explains that “fierce competition” within China has pushed most battery makers there to accept lower profits. In turn, this has spurred them to become incredibly efficient in their manufacturing processes and to train a large, skilled workforce, widening their cost advantage over the United States and Europe.
A big part of China’s success story revolves around a specific type of battery: Lithium Iron Phosphate, or LFP. For a long time, LFP batteries were seen as the budget option for electric cars – they were cheaper but also had less range and power. But battery tech does not stand still, and the continuous development has significantly boosted their performance, making them a solid alternative for many mainstream EVs.
According to the IEA, LFP batteries accounted for nearly half of the entire global EV battery market in 2024. Their popularity is surging in many regions. Europe saw LFP battery use grow by about 90% in 2024. In emerging markets like Southeast Asia, Brazil, and India, LFP batteries captured over 50% of the…
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